6.1 INTRODUCTION AND EXPLANATION OF STRATEGY

The last major IRS enterprise-wide restructuring resulted from the IRS Restructuring and Reform Act of 1998 (RRA ’98), that required a substantial modification to our existing geographical structure based on national, regional, and district offices and established organizational units serving particular groups of taxpayers with similar needs. The current structure is outlined in Figure 8 below.

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6.1 INTRODUCTION AND EXPLANATION OF STRATEGY

Since RRA ’98, taxpayer expectations have continued to evolve. To ensure that the IRS is addressing these changing expectations, our organization needs to adapt to allow for flexibility around our taxpayer landscape and improve our taxpayer-facing and internal capabilities. With the passage of the Taxpayer First Act, we have the rare opportunity to reimagine and rebuild the IRS of the future. Committed to our mission and passionate about serving the Nation’s taxpayers, the IRS of the future will serve taxpayers even more efficiently with an enhanced focus on taxpayer rights and strong career opportunities for our employees.

The Organizational Redesign Strategy would enable our agency to streamline operations by removing silos and adapting to changing taxpayer expectations. The strategy addresses existing challenges throughout the agency and focuses on enhancing the taxpayer experience and employee experience and improving operational efficiencies. The Organizational Redesign Strategy, and all included recommendations, is intended to facilitate cultural change, increase trust and improve understanding and ease for the American taxpayer.

The workforce as well as the public has changed significantly along with technology since our last reorganization almost 20 years ago.

The diversity of our customer base as

well as our workforce has changed

along with that.

• Robert Ragano, TFAO Executive

While our high-level strategy will set the tone for significant structural changes, we acknowledge that further detailed analysis is needed. We will develop additional detail on our organizational structure and operating model by creating an Organizational Blueprint Report which will be delivered in phase two of this work.

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6.2 PROPOSED FUTURE ORGANIZATIONAL STRUCTURE AND DIVISIONS

Our proposed organizational structure is designed to support and sustain the Taxpayer Experience and Training Strategies. The Commissioner and the new Senior Leadership Team would drive collaboration, build internal operational efficiencies, and implement the multi-year Taxpayer Experience and Training Strategies. Figure 9 shows the agency’s new structure with the direct reports to the Commissioner and their direct reports.

Figure 9: Notional Future IRS Organizational Structure

Each Section below outlines our proposed new structure, the organizational challenges that we aim to address, as well as descriptions and details of the offices included within the structure. Together, the sections explain our proposed changes and their potential benefits.

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6.3 COMMISSIONER DIRECT REPORTS

Our new structure would have one Deputy Commissioner, one Chief of Staff, and 10 Executive Officers that report directly to the Commissioner. These direct reports will serve as the Senior Leadership Team and would lead the following organizations: Taxpayer Experience Office, IRS Independent Office of Appeals, Communications Office, Office of Chief Counsel, Taxpayer Advocate Service, Relationships and Services Division, Compliance Division, Enterprise Change and Innovation Division, Operations Management Division, and the Information Technology Division. The Commissioner and the Senior Leadership Team would work collaboratively to set the strategic direction and lead the numerous executives that oversee day-to-day operations.

Figure 10: High-level Notional Depiction of the Senior Leadership Team

We seek to shift from our current hierarchical structure to a flatter headquarters leadership structure and decision-making body. While the total number of direct reports to the Commissioner will increase under the new organizational structure, the Senior Leadership Team ⁴⁰ would be reduced significantly. A smaller overall team allows for a more open style of discussion and a more effective environment to brainstorm solutions. Decisions will be well-informed by research and data supporting the best practices for improving the taxpayer experience, protecting taxpayer rights, enhancing the employee experience, increasing program effectiveness and realizing operational efficiencies. Strategic initiatives will be clearly defined and well-coordinated; communications, both internally to the workforce, and externally to our taxpayers will be in plain language and easy to understand. The leadership culture will embrace shared accountability and foster innovation and collaboration.

40 In the new organizational structure, the Senior Leadership Team will serve in place of the current Senior Executive Team.

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Figure 11 provides an alternate visual representation of how the Senior Leadership Team would

Figure 11. Alternate visual representation for how the Senior Leadership Team will collaboratively

work together. Protecting Taxpayer Rights and holistic Taxpayer Experience Activities will encapsulate all leadership decisions and activities. Statutorily required offices are indicated by a

darker shade of blue.

41 See Appendix 9.7 for previous oversight recommendations from offices such as the Chief Risk Office, TIGTA, and GAO we feel align to, validate, and support some of our proposed changes.

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6.3 COMMISSIONER DIRECT REPORTS

New Top-Level Organizations Reporting to the Commissioner The Deputy Commissioner, Internal Revenue Service would report to the Commissioner, replacing the current dual deputy structure. The Deputy would serve in an advisory role to the Commissioner and will serve as the Commissioner’s second in command. This position should be filled by an agency career employee who has demonstrated broad understanding and leadership of the multiple areas at the IRS. This would provide consistency and continuity as Commissioners, who are political appointees, transition in and out of the agency. While the Deputy would not have any direct reports, they would act as a representative for the Commissioner during periods of transition and may manage the members of the Senior Leadership Team through delegation.

In this model, the IRS Commissioner would be empowered to use the Deputy position based on their individual leadership style and emerging agency needs. If the Commissioner wants more direct involvement in the day-to-day operations, the Deputy’s role would be more advisory, potentially handling some of the Commissioner’s other duties to free the Commissioner to fully engage in setting strategic direction and overseeing the agency’s operations. If an emerging crisis or significant legislative issue requires the Commissioner’s primary focus, the Deputy could assume more direct involvement in overseeing the operations.

As delegated, the Deputy Commissioner may hold the same authority of the Commissioner while still being accountable to the Commissioner and reducing additional layers of leadership.

A key feature of this structure is the introduction of the Taxpayer Experience Office . Comprised of a relatively small staff of experts in the areas of customer experience, research, behavioral analytics, human-centered design and service delivery with the ability to provide other organizational units with information on changing taxpayer expectations, industry trends and ways to apply customer service best practices within the framework of IRS operations and federal limitations. The Taxpayer Experience Office would focus on continuously improving the taxpayer experience across all interactions with the IRS.

The Chief Taxpayer Experience Officer would lead the Taxpayer Experience Office and would work closely with their peers across the agency, including the National Taxpayer Advocate (NTA). The Taxpayer Advocate Service will help to leverage research studies and systemic monitoring techniques to inform real-time improvements to the taxpayer experience and develop longer term strategies, while also playing a key role in informing the continuous feedback loop described in the Taxpayer Experience Strategy. The Chief Taxpayer Experience Officer would hold primary accountability for overseeing implementation of the Taxpayer Experience Strategy, continuously monitoring, setting strategic direction and establishing priorities for improving the taxpayer experience while also identifying taxpayer trends and determining how improvements

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can be implemented across the agency. They would be deeply focused on the taxpayer experience - conducting research, engaging both internal and external stakeholders in dialogue and listening sessions, gathering data and monitoring industry trends and best practices. The Chief Taxpayer Experience Officer would employ that information to drive strategic direction and identify continuous improvement opportunities for the IRS taxpayer-facing programs.

The Relationships and Services Division would bring together all taxpayer-facing service operations and activities, serving as the front door to the IRS for all taxpayers and other stakeholders. This division would be responsible for end-to-end service delivery and relationship management while sustaining the value of having some aspect of taxpayer segmentation and specialization within the program areas. See Section 6.4 for additional detail.

The Compliance Division would include all exam functions and collection operations in addition to the Criminal Investigation and Whistleblower Office. This division would be focused towards more efficient operations and providing consistent outcomes for resolving taxpayer compliance issues. See Section 6.5 for additional detail.

The Relationships and Services and Compliance divisions would be responsible for implementing taxpayer experience improvements, continuously communicating with the Taxpayer Experience Office on areas for improvement and success.

The Enterprise Change and Innovation Division would plan and oversee the implementation of enterprise-wide initiatives working with leadership across the agency to coordinate annual strategic planning activities to streamline decision making and enable the agency to set and meet its short and long-term strategic goals. The Chief Taxpayer Experience Officer would work alongside the offices within this division to ensure taxpayer experience improvement initiatives, and findings, are considered in strategic planning activities. See Section 6.6 for additional detail.

The Operations Management Division would be responsible for coordinating and leading all mission-support operation functions across the IRS and would include the Chief Risk Officer and Chief Diversity Officer. The Chief Risk Officer and Chief Diversity Officer will have dotted line reporting to the Commissioner. See Section 6.7 for additional detail.

The Information Technology Division would include distinct functions focused on modernization to better respond to taxpayer demand for enhanced information technology solutions and online services. Protecting taxpayer data would continue to be a priority for the division, ensuring protection against evolving threats. See Section 6.8 for additional detail.

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The Communications Office, as a direct report to the Commissioner, would have a narrower set of responsibilities more focused on agency level media and public relations and interactions with Congressional offices at the national level. This new Communications Office would work to consistently improve public perception of the IRS and increase taxpayer awareness and trust. This office would also support the agency’s operating strategies to ensure that communications with taxpayers, the Congress and other stakeholders are consistent and coordinated IRS-wide. Elements of today’s Communications and Liaison organization would be shifted to the Outreach and Education office within the Relationships and Services Division to more directly assist taxpayers and expand upon the agency’s social media strategy. Some aspects of the current Communications and Liaison organization would also move to the Third-Party Relationships office also under the Relationships and Service Division to ensure even greater and stronger partnerships with the practitioner community and the local/field Congressional offices.

The IRS Independent Office of Appeals structural model complies with Section 1001 of the Taxpayer First Act. The Taxpayer First Act required that the IRS establish an office that: “resolve Federal tax controversies without litigation which is fair and impartial to both Government and the taxpayer”, and “enhance public confidence in the integrity and efficiency of the Agency”, and be a direct report to the IRS Commissioner. The IRS Independent Office of Appeals must also be “…under the supervision and direction of an official to be known as the Chief of Appeals.” No additional future changes for the Independent Office of Appeals are proposed.

Unchanged Organizations Reporting to the Commissioner The National Taxpayer Advocate’s (NTA) role remains

The [previous] model created

unchanged in the new organizational structure. The

stovepipes, silos, and conflicts

National Taxpayer Advocate will continue to lead the

over resources and priorities

Taxpayer Advocate Service and report directly to the

across operating divisions and

Commissioner. Taxpayer Advocate Service employees

support functions.

will continue to assist taxpayers who are experiencing

• Association of Former economic harm, who are seeking help in resolving tax Internal Revenue Executives problems that have not been resolved through normal

channels, or who believe an IRS system or procedure is not working as it should. Taxpayer Advocate Service employees share the responsibility with all IRS personnel to ensure taxpayer rights are considered and protected in all cases. The National Taxpayer Advocate and the Tax Advocate Service would work closely with the new Taxpayer Experience Office to provide key insights into systemic breakdowns and other emerging issues impacting the taxpayer experience.

The [previous] model created stovepipes, silos, and conflicts

over resources and priorities across operating divisions and

support functions.

• Association of Former Internal Revenue Executives

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The Office of Chief Counsel will continue to serve as chief legal advisor to the Commissioner on all matters pertaining to the interpretation, administration, and enforcement of the Internal Revenue Code. The Office of Chief Counsel provides services including published guidance, litigation, legal advice, and training designed to educate taxpayers, reduce burden, and simplify tax administration. The Office of Chief Counsel also plays a critical role in interacting with external stakeholders and gathering input to help shape the regulations and other published guidance provided to taxpayers.

The Chief of Staff will continue to provide critical strategic and operational support to the Commissioner’s office. There will be no significant change from current operations. The Chief of Staff will support the Commissioner to ensure that agency actions requiring priority attention are addressed in a timely and effective manner. This office will aid the Commissioner in navigating demands on the agency and provide guidance to the Commissioner and Deputy in the execution of day-to-day operating activities. The Chief of Staff Office will ensure that the Commissioner, Deputy, and Senior Leadership Team have the appropriate information to make decisions and will provide the Commissioner the necessary leadership information to effectively guide the agency.

Adding Value Increased Accountability: This reporting structure provides a clear delineation of senior executives responsible for service and compliance operations (currently taxpayer service and compliance activities are dispersed across the various business units) and provides the Commissioner with information related to the current state of organizational initiatives and potential areas of concern. It also enables quick escalation of key issues or decisions to the Commissioner. The Commissioner can also continue to communicate organizational priorities directly with the Assistant Commissioners of Relationships and Services, Compliance, Enterprise Change and Innovation, Operations Management and Information Technology.

Enhanced Innovation: Through a strong emphasis on cross-agency collaboration amongst every direct report and their divisions and offices, there will be increased focus on innovation throughout the organization. With a clear line of sight into both long-term strategy (e.g., Taxpayer Experience, Enterprise Change and Innovation) and current operational challenges (e.g., Relationships and Services, Compliance, Operations Management, Information Technology), the Commissioner will have clear insight into key areas best positioned for innovative approaches or technology that will address existing challenges and help us meet our long-term goals.

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Strengthened Communication and Improved Awareness: The Communications Office would coordinate across the IRS to understand the nuances of each division or office and effectively share progress, wins, and new services with the Congress, the White House, and media outlets. Working with the Taxpayer Experience Office, the Communications Office will share information about taxpayer service pilots and new initiatives. The Communications Office will be responsible for effectively disseminating key messages from the Commissioner and other leadership to internal and external audiences. With a reduced scope of responsibilities, this office will be able to focus more intently on internal and external agency level communications.

Improved Taxpayer Experience: The Taxpayer Experience Office creates a dedicated organization responsible for driving enterprise-wide strategy to improve the taxpayer experience across all taxpayer interactions. The Taxpayer Experience Office would ensure a consistent voice and experience across all taxpayer segments by developing comprehensive taxpayer experience guidelines and expectations. The Chief Taxpayer Experience Officer’s responsibilities extend beyond taxpayer interactions with the Relationships and Services Division, which would be the originating source for most taxpayer interactions. The Chief Taxpayer Experience Officer will also seek to drive consistency across many different areas, including working within the Compliance Division, the IRS Independent Office of Appeals, Taxpayer Advocate Service and the Office of Chief Counsel to facilitate the use of new tools for communicating with taxpayers and their representatives. We envision the Chief Taxpayer Experience Officer as a subject matter expert with the ability to provide other organizational units with information on changing taxpayer expectations, industry trends and ways to apply customer service best practices within the framework of IRS operations and federal limitations.

The Taxpayer Experience Office would continuously monitor taxpayer and stakeholder feedback and identify emerging trends across industry innovations and taxpayer behaviors. The office would also identify opportunities in existing taxpayer-facing processes and drive continuous improvements in real time. Furthermore, this office would help to eliminate systemic breakdowns before they can have a negative impact on taxpayers.

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Prioritized Taxpayer Rights: The National Taxpayer Advocate will continue to play a key role in ensuring taxpayer rights are protected, helping to inform taxpayer experience and other agency strategies accordingly. In addition, the Taxpayer Experience Strategy, Training Strategy, and Organizational Redesign Strategy were developed to not only improve our service and work to eliminate taxpayer challenges, but to further ensure that taxpayer rights were protected. Changes made to the Relationships and Services, Compliance, Enterprise Change and Innovation, Operations Management, and Information Technology Divisions speak to opportunities to improve operational efficiencies, collaboration, and internal security. As we improve efficiencies, the quality of service to the taxpayer will improve, consistent with and in support of the Taxpayer Bill of Rights. Additionally, the Taxpayer First Act codified the responsibility of an IRS Independent Office of Appeals led by the Chief IRS Independent Office of Appeals, reporting directly to the Commissioner. The IRS Independent Office of Appeals will continue to oversee effective procedures within the appeals process, and, most importantly, ensure this process is fair and impartial to benefit all taxpayers.

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6.4 RELATIONSHIPS AND SERVICES DIVISION

Working together with the Strategic Planning and Legislative Implementation Office and the Chief Taxpayer Experience Officer, the Assistant Commissioner of Relationships and Services would implement the vision of the Taxpayer Experience Strategy. With all taxpayer-facing service channels under one division, the Assistant Commissioner of Relationships and Services will be uniquely suited to oversee implementation of a service delivery model that, integrates digital, telephone, virtual and face-to-face channels seamlessly. They would deliver the services to taxpayers across all channels in accordance with the strategic direction set out by the Chief Taxpayer Experience Officer and agency leadership. Leadership in this division will continually evaluate business processes to identify and implement performance improvement opportunities. They would engage regularly with the Compliance Division to deliver a holistic taxpayer experience, facilitating increased voluntary compliance while reducing taxpayer burden. As a direct report to the IRS Commissioner, the Assistant Commissioner of Relationships and Services would ensure efficient flow of information impacting the taxpayer experience to the Commissioner and, to all members of the Senior Leadership Team. Employees in this division will be welltrained to resolve taxpayer inquiries and will be equipped with the knowledge and tools needed to identify the right resources and personnel to resolve taxpayer issues.

Figure 12: High-level Notional Relationships &

Services Division.

This division will include six functions dedicated to delivering services and information: Assisted Services, Digital Services, Outreach and Education, Third-Party Relationships, Identity Theft / Fraud, Submission Processing and Privacy.

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The Assisted Services Office would be responsible for services delivered by IRS employees via walk-in centers and toll-free telephone lines as well as online text and video chat. The Assisted Services Office would include identity theft victim assistance. Assisted Services would continue to work closely with the Identity Theft/Refund Fraud office. This office would be accountable for implementing the Seamless Experience capability described in the Taxpayer Experience Strategy, integrating channels and facilitating taxpayers’ ability to start their journey in one channel and seamlessly flow to the channel or area most suited to resolving their issue. This office would connect employees across channels and across the agency to holistically resolve taxpayer inquires in the most efficient and effective way possible.

The Digital Services Office would be responsible for leading programs and capabilities centered on delivering services and information through digital channels. Working with the Assistant Commissioner of Enterprise Change and Innovation, the Chief Taxpayer Experience Officer, and the Assistant Commissioner Chief Information Officer, this function would evaluate, test and implement new digital service options to improve the taxpayer experience. Integrating oversight of our digital service environment will give the IRS a more complete view across the taxpayers’ digital experience. Co-locating this function with the Assisted Services, Outreach and Education and Third-Party Relationships Offices would allow for digital solutions to be leveraged across those other service delivery environments. The Digital Services Office would continuously monitor the taxpayer experience across the digital environment, identifying breakdowns and improvement opportunities in real time. This office would consist of the capabilities and programs currently housed within Online Services, and parts of the Joint Operations Center. This office would work closely with the Assistant Commissioner Chief Information Officer as well as compliance functions to ensure an enterprise-wide approach to digital communication with taxpayers and stakeholders. This office will also execute on pieces of the Taxpayer Experience Strategy related to Expand Digital Services and a Seamless Experience.

The Outreach and Education Office would be dedicated to taxpayer education and outreach, supporting both service and compliance programs. This office would work closely with ThirdParty Relationships to deliver volunteer-based programs in support of return preparation and taxpayer education (e.g., Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs). Taxpayer and stakeholder outreach activities currently conducted in the IRS’s Media and Publications and Communications and Liaison Offices would move to Outreach and Education. This function would execute the IRS’s Social Media Strategy, developing and using new tools and resources to reach taxpayers on the platforms they use most frequently. Integrating all outreach and education activities into a single function would provide us with the opportunity to eliminate redundant activities, better leverage best practices, realize economies of scale and amplify our reach and effectiveness with messaging spanning across our service and compliance programs. This office would be responsible for executing on the Proactive Outreach and Education capabilities outlined in the Taxpayer Experience Strategy.

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The Third-Party Relationships Office would be responsible for delivering program and capabilities specifically dedicated to furthering relationships and partnerships across the tax ecosystem. Acknowledging that the IRS cannot effectively administer our complex tax system and serve our broad and diverse customer base alone, this function includes groups that interact with tax professionals and other stakeholders across the public, private and non-profit sectors to collaborate on delivering services and information to taxpayers. This office would be responsible for engaging our Community of Partners, developing, nurturing and integrating partnerships while creating forums to facilitate dialogue. Together with our partners, this office would support implementation of new initiatives, programs and legislation.

As we look inward,

we’re going to keep coming back to

our organizational structure and

whether it is actually enabling

and empowering us to have the

most successful interaction with

the taxpayer possible.

• Lia Colbert, TFAO ��������� Lead

The Identity Theft / Fraud Office would integrate identity theft workstreams across the agency. This office would work closely with Assisted Services to meet the needs of victims of identity theft. Integrating our various identity theft assistance, prevention and resolution activities would help improve information sharing, streamline operations, manage fraud risks, and further strengthen the agency’s efforts to prevent identity theft for all taxpayer groups. This office would work closely with Third-Party Relationships to facilitate the Security Summit and Identity Theft Refund Fraud Information Sharing Assistance Center (IDTRF-ISAC).

The Submission Processing Office will continue to be responsible for processing tax returns and related documentation, including paper returns, electronic submissions, tax payments, and refunds. One change to their scope of responsibilities would be that the organization would oversee mail processing across all IRS facilities which includes, generating opportunities for increased consistency, streamlined processes, identification and expansion of best practices as well as, acceleration of our enterprise-wide digitalization strategy. This office would assume oversight for all “processing” activities across the IRS including paper power of attorney forms, transcript requests (e.g., through the Income Verification Express Service and Get Transcripts by Mail requests), Individual Tax Identification Numbers and applications for participation in the eServices suite of digital offerings for tax professionals.

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The existing Privacy, Governmental Liaison and Disclosure (PGLD) Office will be realigned into the Relationships and Services Division as Chief of Privacy. This reaffirms the agency’s commitment to taxpayer privacy. It mirrors Treasury’s Privacy, Transparency and Record organizational design. It also maintains organizational balance between the Chief of Privacy and the Assistant Commissioner Chief Information Officer where the Chief of Privacy is responsible for the vision, strategy and operational use of personal information and the Assistant Commissioner Chief Information Officer is responsible for the systems where the use takes place.

Adding Value The Relationships and Services Division structural component, coupled with implementation of the Taxpayer Experience Strategy, brings integration across program areas, creates a more holistic approach to service delivery and facilitates swift and complete issue resolution. This structure creates one division responsible for end-to-end service delivery and relationship management, while sustaining the value of having some aspect of taxpayer segmentation and specialization within the program areas. Under the omni-channel service delivery model and the concierge concept from the Taxpayer Experience Strategy, this division would serve as the entry point for all taxpayer and stakeholder interactions. Employees in Relationships and Services would collaborate with their peers across the IRS to resolve taxpayer inquiries and issues in the most expeditious and effective manner, while imposing the least amount of burden on the taxpayer possible.

Alignment to Strategies: Working together with the Taxpayer Experience Office, the Relationships and Services Division would hold primary accountability for executing the Taxpayer Experience Strategy including, Digital Services, Proactive Outreach and Education, and Community of Partners. This ensures enterprise level decision making for investments toward key taxpayer service operations and coordination across the agency for continuity in external / internal communications. This division also demonstrates the IRS’s priority of putting taxpayers first and serving all stakeholders quickly and effectively.

Promoting Efficiencies: This division centralizes taxpayer service operations across all taxpayer segments, eliminating redundant processes, coordinating investments in new taxpayer-centric initiatives, and effectively allocating resources across the agency in support of all taxpayer segments and stakeholders. This model also reduces burden on taxpayers and stakeholders to navigate a maze of service channels to determine the one most suited to their needs.

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Clearly Identified Service Channels: Functions dedicated to assisted services, digital services, outreach and education, and third-party relationships provide more streamlined services to our taxpayers. Employees in these functions would have the appropriate tools and access to information to better assist taxpayers and guide stakeholders to the right area of the IRS to resolve their issue.

Improved Integration Across Channels: The clearly identified service channels would also be more integrated allowing taxpayers to flow from one channel to another when needed. Placing Digital Services and Assisted Services Offices in the same division will position online activities closer to phone operations and allow the IRS to more effectively allocate and reallocate resources across the two functions. The IRS would be better positioned to transition taxpayer needs from phones to electronic / digital sources of communications, and address gaps in reaching specific taxpayer segments or underserved communities. Over time, this integration would enable the IRS to develop and institute measures that better reflect the taxpayers’ holistic journey across multiple touchpoints with the IRS.

Streamlined and Improved Identity Theft/Fraud Activities: This division would further streamline and improve our identity theft and fraud activities. It would establish an organization which would work closely with the Information Technology Division to continue the IRS’s work to identify and implement new technology, innovation, policy and programs to prevent identity theft and fraud. Leveraging the Continuous Feedback Loop and advanced Data Management and Analytics envisioned by the Taxpayer Experience Strategy, identity theft activities would be better informed by real time data drawn from case histories, contacts with taxpayers and other sources across the agency and beyond. Having Identity Theft/Refund Fraud and Third-Party Relationships in a single division further facilitates the continuation of the highly successful public-private partnership through the Security Summit. Integrating our identity theft work with the Outreach and Education Office provides increased opportunities to educate taxpayers and tax professionals on steps they can take to protect themselves from identity theft and resolve issues if they fall victim.

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6.5 COMPLIANCE DIVISION

Figure 13: High-Level Notional Compliance Division.

A key IRS responsibility is to ensure taxpayers comply with the tax laws and voluntarily meet their tax obligations. Our current organizational structure for Compliance and Enforcement lacks a centralized compliance function. Compliance activities occur mainly within the four business units that perform similar functions but have distinct taxpayer segments; Wage and Investment, Small Business/Self Employed, Large Business and International, and Tax Exempt/ Government Entities. The business units focus on examinations, collection, and within TE/GE the Rulings and Agreements functions. Our future structure would establish a unified Compliance Division, creating a centralized compliance function geared towards ensuring more efficient operations and providing consistent outcomes for resolving taxpayer compliance issues. This division would also ensure a focused approach to addressing emerging compliance issues. This division would include five functions dedicated to coordinating and leading all IRS compliance and enforcement activities across the agency: Compliance, Whistleblower, Criminal Investigation, Exam and Collection.

The Assistant Commissioner of Compliance would manage consolidated exam functions and collection operations along with overseeing Criminal Investigation and the Whistleblower Office. The Compliance Division would also include Rulings and Agreement functions from TE/GE due to its technical nature and compliance with statutory requirements. The Compliance Division would promote efficiencies, reduce duplicative activities and fragmentation, empower employees and continue to build talent.

The Chief Compliance Officer would work directly with the other leadership members of the Compliance Division to develop an integrated comprehensive compliance strategy and exam plan. Working in collaboration with the Chief Data Officer from the Enterprise Change and Innovation Division, the Chief Compliance Officer would identify and track evolving taxpayer behaviors across all taxpayer segments in order to implement innovative compliance solutions. The Chief Compliance Officer would also collaborate with the new Chief Taxpayer Experience Officer to ensure information on taxpayer satisfaction, expectations and trends

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6.5 COMPLIANCE DIVISION

is shared. This coordinated effort would identify taxpayer segments in need of proactive outreach and education, as well as additional employee training needs. Along with the Chief Taxpayer Experience Officer, the Chief Compliance Officer would also work with the Assistant Commissioner of Relationships and Services to design and implement taxpayer-facing capabilities, such as chat, secure document exchange, appointments, across compliance operations in order to proactively address recurring taxpayer issues to ensure a fair and professional audit process that anticipates and resolves frequent taxpayer issues, questions, or concerns.

The Whistleblower Office will have no significant changes to its responsibilities from its current operations within the present-day organizational structure. The Whistleblower Office will retain its current critical position, reporting directly to the Assistant Commissioner of Compliance.

The Criminal Investigation Office will have no significant changes to their responsibilities from its current operations within the present-day organizational structure. The Criminal Investigation Office would report directly to the Assistant Commissioner of Compliance. For more information on the position of Criminal Investigation Office within the Organizational Structure, refer to the Appendix Section 9.7.7. ⁴²

The Exam Office will consolidate exam operations and processes that currently span across multiple business units. This office will be responsible for all examination processes across all taxpayer segments but would maintain some degree of specialization to address unique taxpayer needs. The Exam Office will work to document best practices and behavioral trends related to the examination processes across all taxpayer segments and identify opportunities to share knowledge across the Compliance Division to improve operational efficiencies.

The Collection Office will continue to be responsible for collection activities across all taxpayer segments. Alongside the consolidated Exam Office, the Collection Office will be better positioned to coordinate priorities and learn about taxpayer behavioral trends resulting in more directed education to taxpayers. The Collection Office will also document best practices and behavioral trends to share with the Exam Office and help inform compliance strategies across the division.

42 See Appendix 9.7.7 for additional rationale for the placement of the Criminal Investigation Office within the Compliance Division.

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6.5 COMPLIANCE DIVISION

Adding Value Promoting efficiencies and reducing duplication and fragmentation: The Compliance Division consolidates compliance functions across taxpayer segments into one division, minimizing the duplication of oversight, planning, services and responsibilities and developing communities of expertise. This will structure facilitate the development of a compliance strategy that considers compliance issues across all taxpayer segments and enables Exam and Collection leadership to identify compliance related behavioral trends across taxpayer segments. This coordination ensures reduced variability in compliance processes and a more consistent taxpayer experience. Ultimately, this consolidation aims to reduce duplicative activities related to strategic planning, issue identification, work plan development, case selection, performance monitoring, and research, where possible, across taxpayer segments.

Empowering employees and building talent: Combining compliance functions creates a potential career path for compliance employees to follow and advance their skills by beginning with less complex income tax audits and progressing to more complex work. This change would also enable a consistent approach to onboarding and coordinated training across key topics (e.g., emerging issues training, manager training), and ensure that the compliance workforce has access to professional development resources and tools. Additionally, combining examination functions would empower employees to make decisions through a clearer understanding of how their goals and responsibilities support enterprise-wide examination priorities.

Maintaining position of Criminal Investigation: Maintaining current positioning will help reduce the potential risk of public perception that the outcome of criminal investigations may be politically influenced. This structure also offers stability across presidential administrations, enabling long-term strategic planning and ability to achieve our long-term goals. Lastly, reporting directly to the Assistant Commissioner of Compliance allows for an integrated comprehensive compliance strategy that includes a more balanced perspective on the IRS’s enforcement challenges and drives compliance to include the Criminal Investigation Office in strategic approaches to tax abusive schemes.

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6.6 ENTERPRISE CHANGE AND INNOVATION DIVISION

The Enterprise Change and Innovation Division would serve as the strategic planning and integration role across the agency, utilizing data management, analytics and business process improvement best practices to identify and implement enterprise-wide initiatives that would enable the IRS to be more efficient and effective in serving taxpayers and administering the tax code. Most immediately, this division will coordinate the Taxpayer Experience Office and Human Capital function to implement the TFA Taxpayer Experience, Training, and Organizational Redesign Strategies through program management, governance, change management and other tactical implementation functions over the coming months. The Assistant Commissioner of Enterprise Change and Innovation would integrate all agency strategies and operational priorities into an agency level strategic plan. While the Chief Taxpayer Experience Officer would be primarily responsible for the Taxpayer Experience Strategy, the

Figure 14: High-Level Notional Enterprise Change and

Innovation Division

Assistant Commissioner of Enterprise Change and Innovation will be responsible for integrating the Taxpayer Experience Strategy with other agency priorities and overseeing enterprise level prioritization of investments and initiatives. The Assistant Commissioner of Enterprise Change and Innovation would also lead significant agency change efforts including the organizational redesign and implementation of future significant legislative changes.

The Data Office, led by the Chief Data Officer, will own the development of an enterprise data strategy that will ensure alignment with and ability to support functional unit based strategic plans and a long-term strategic vision. This data strategy will also provide the IRS with a framework to assess, prioritize, and address data access and analytics needs across the IRS. This office will curate a centralized data management repository, providing an easily accessible and accurate source for enterprise-wide decision making. This office will be responsible for implementing the Data Management and Analytics components of the Taxpayer Experience Strategy.

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6.6 ENTERPRISE CHANGE AND INNOVATION DIVISION

The Performance Improvement and Change Management Office will advise others across the agency on opportunities to improve internal business processes and reduce duplicative activities in their daily operations. This office will be responsible for developing change management and communication strategies across the agency. This group will include Lean Six Sigma experts who can help improve service to the taxpayer by leading accelerated process improvement initiatives.

Ultimately, you

cannot improve case

management without improving

the digitalization of

paper records.

• Jeffrey Tribiano, Deputy Commissioner

for Operations Support

The Enterprise Digitalization and Case Management Office (EDCMO), which will focus on enhancing the taxpayer experience by improving business processes and modernizing systems through two critical initiatives: Digitalization and Enterprise Case Management. The office will empower taxpayers and IRS employees to resolve issues in a simplified digital environment. It will use agile customer-centered thinking and draw on leading industry test-and-learn practices to quickly identify what combination of business process and technology works best for the IRS’s customers and employees.

The Strategic Planning and Legislative Implementation Office would drive service-wide implementation of the Taxpayer First Act strategies as well as oversee and report on future enterprise wide legislation. Additionally, this office would coordinate annual strategic planning and prioritization activities working with senior leadership across Relationships and Services, Compliance, Operations Management, Information Technology, Taxpayer Advocate Service, Counsel, Independent Office of Appeals, Communications, and the Taxpayer Experience Office, to enable the IRS to meet our short term and long term strategy goals.

Adding Value Coordinated Strategic Implementation: The IRS is frequently called upon to assist with implementation of legislation. The Enterprise Change and Innovation Division would enable the IRS to strategically address legislative changes, standardize execution, enable coordination with the appropriate operating divisions, and securely archive key information. There would also be a high degree of coordination between the Strategic Planning and Legislative Implementation Office and other strategic offices, including the Taxpayer Experience Office, to ensure servicewide alignment of strategic priorities and reporting on the IRS Strategic Plan.

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6.6 ENTERPRISE CHANGE AND INNOVATION DIVISION

Data-Driven Business Decision Making: The Data Office will ensure strategic planning business decisions are data driven and in line with documented organizational challenges. To facilitate these business decisions, the Chief Data Officer will collaborate with business operations (e.g. Relationships and Services, Compliance) to understand and fulfill their needs. This office will also look to the private sector and identify emerging trends or tools that could be brought into current operations and will play a broader role in using a data-driven approach to proactively identify taxpayer insights. Most importantly, this organization will oversee implementation of the Data Management and Analytics component of the Taxpayer Experience Strategy, driving the agency toward full data integration and enabling advanced analytics as well as robotics, artificial intelligence and other innovative solutions that rely on a centralized authoritative data source.

Promoting Efficiencies / Driving Digitalization Accountability Efforts: The Enterprise Digitalization and Case Management Office consolidates the various disparate and fragmented digitalization efforts and projects across the agency into one enterprisewide organization. In combination with the Assistant Commissioner of Enterprise Change and Innovation, this office will help drive accountability for digitalization efforts and capabilities across the IRS which will improve our ability to leverage data to inform our compliance and taxpayer service initiatives.

We need to consider

the way we do our

strategic planning and

how we operationalize

our strategic plan.

• Senior Executive IRS Employee

Enhanced Innovation: Establishment of the Enterprise Change and Innovation Division as the “strategic integrator” would centralize enterprise strategies and initiatives. This centralization would not only drive greater integration, but enable a more holistic approach towards innovation, utilizing increased data management, analytics and business process improvement as well as leveraging new and evolving industry tools and technologies.

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6.7 OPERATIONS MANAGEMENT DIVISION

As we move forward with implementing our new organizational model, we envision a revitalized support structure that will address many of the challenges we face in today’s current tax administration environment – both from an external taxpayer delivery perspective and internal operations perspective. In our future organizational structure, the existing Operations Support Division will be partitioned into two distinct divisions: The Information Technology Division, as well as a mission-support focused Operations Management Division.

The Operations Management Division would consist of several existing organizational units that are responsible for coordinating and supporting all mission-support functions for the IRS. Operations Management links various offices throughout the IRS, ensuring a smooth flow of information and ease of internal and workforce operations. The Operations Management Division would contain many of the existing support functions within Operations Support’s current structure. Operations Management functions would include: Diversity Office, Human Capital Office (HCO), Financial Office, Facilities Management and Security Services (FMSS), Procurement Office, and Risk Office. These functions would support day-to-day IRS operations, enabling other functions within the organization to focus solely on taxpayer service.

Figure 15: High-level Notional Operations

Management Division.

The functions within the Operations Management Division would continue to facilitate an environment of innovation, continuous improvement and operational efficiencies. For example, the Procurement Office has created a contract vehicle for conducting phased, developmentfocused acquisitions: Pilot IRS. The multi-phased structure used by Pilot IRS allows the Agency to quickly issue contract solicitations and experiment with innovative solutions while also limiting risk. This type of innovative approach to solve existing challenges will be amplified by all organizations within the Operations Management Division.

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6.7 OPERATIONS MANAGEMENT DIVISION

Two key roles within the Operations Management Division, the Chief Risk Officer and the Chief Diversity Officer, would operationally sit within Operations Management but will have a direct line to the Commissioner enabling additional oversight, collaboration, and guidance.

Adding Value Increased Focus on Equity, Diversity and Inclusion: The Diversity Office would operate within the Operations Management Division, but would also have a dotted-line relationship directly to the Commissioner. By establishing direct access to the Commissioner, the Diversity Office would be able to easily escalate any diversity or inclusion issues and further the IRS’s commitment to preventing discrimination against employees, customers, and other stakeholders. This relationship will also provide additional opportunities to incorporate equity, diversity, and inclusion initiatives with the Agency’s long-term strategies and goals.

Improved Understanding of Risk: The Risk Office will operate within the Operations Management Division but will also have a dotted-line relationship directly to the Commissioner. This positioning will enable the Commissioner to maintain awareness of outstanding or emerging risks and rapidly develop a mitigation plan or realign resources. This transparency would lead to an increased focus on enterprise risks and risk management in both the development of longterm strategies and enterprise-wide decision making. The Risk Office would also collaborate with the Enterprise Change and Innovation Office to effectively manage enterprise risk and inform enterprise planning.

Increased Focus on Human Capital Initiatives: By reducing the number of offices reporting to the Assistant Commissioner of Operations Management, this structure enables increased focus and allocation of resources to the Human Capital Office. The Human Capital Office will work with various offices throughout the organization to reduce redundancies and improve workforce planning and hiring processes.

Alignment to Strategies / Building Talent: The Operations Management Division will enable the Training Strategy by establishing an IRS University (IRSU) within Human Capital, a centralized learning function that leverages technology to provide enhanced training experiences for employees. The Human Capital Office will work with the Information Technology Division to support the IRS University (IRSU) by identifying requirements, building new capabilities, and implementing new professional development technologies.

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6.8 INFORMATION TECHNOLOGY DIVISION

In our future organizational structure the Information Technology Division would retain current staff, scope, and responsibilities (e.g., Strategic Oversight, Enterprise Development, Cybersecurity, Enterprise Operations/Computing Centers, User and Networks Service, and Enterprise Architecture and Engineering, and Program Modernization) in order to better respond to taxpayer demand for innovative information technology solutions and online services.

The Assistant Commissioner Chief Information Officer (ACCIO) would oversee the Information Technology Division and will regularly collaborate with the other Commissioner’s Direct Reports to understand their technology operational requirements and assist in developing and delivering in support of enterprise priorities. The Assistant Commissioner Chief Information Officer would manage the core technology infrastructure and oversee day-to-day IT operations and departments as well as provide thought leadership on emerging technologies and select the proper capabilities to integrate into the organization. The Assistant Commissioner Chief Information Officer would work closely with the Procurement Office to effectively identify and deploy new capabilities. Additionally, the Assistant Commissioner Chief Information Officer would identify and bring forward key technology related to improving the taxpayer experience and meeting taxpayers’ evolving expectations. The Assistant Commissioner Chief Information Officer would work collaboratively with the Chief Taxpayer Experience Officer to ensure alignment with the Taxpayer Experience Officer’s efforts to provide the optimal taxpayer experience using innovative technology solutions.

Figure 16: High-Level Notional Information

Technology Division

The Assistant Commissioner Chief Information Officer would be responsible for all Agency IT services similar to its current Associate Chief Information Officer areas. To address provision 1302, the Cybersecurity Office would expand its purview to incorporate a more holistic approach of cybersecurity activities across the Agency, engaging all operating divisions. This expansion will be accomplished through an enhanced and unified governance framework focusing on strategy and operational responses to external and internal threats. This framework will help reduce redundancies where multiple IRS offices address the same type of cybersecurity issue without collaboration. It

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6.8 INFORMATION TECHNOLOGY DIVISION

will also reduce partial identification and treatment of cyber incidents, streamline data sharing and treatment and improve Agency-wide oversight of cyber incidents.

Adding Value Streamlining Appropriations: The IRS’s support priorities are more clearly defined, enabling more streamlined funding and appropriations opportunities.

Earlier Awareness and Increased Collaboration: By aligning the Information Technology functions as a direct report to the Commissioner, it drives earlier awareness and increased collaboration with the other members of the Senior Leadership Team and the Commissioner, to address enterprise priorities and emerging issues.

Promoting Cybersecurity Efficiencies / Reducing Fragmentation: The Information Technology Division includes an expanded Cybersecurity Office allowing for an increased collaborative approach to plan for cybersecurity activities, improve our ability to respond to cyber threats, reduce redundancies in incident response areas, and increase our ability to combat cybersecurity and other threats. This change would also allow for more effective and streamlined recruiting of multi-skilled technical and relational employees in the cyber space. ⁴³

Continuity of Operations: In establishing a distinct division for organizations focused on developing and implementing technology solutions the Agency would be able to “lift-and-shift” many existing functions. This would enable select offices to quickly transition to the new model and continue to build upon key initiatives currently underway. By aligning existing mission-support into two divisions, the structure will enable additional focus on and guidance to the functions and offices within the Information Technology and Operations Management Division.

43 See Appendix 9.7.8 for expanded rationale for how positioning the Cybersecurity office will better position the Agency to address cyber threats.

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6.9 MEASURING SUCCESS AND ADDITIONAL CONSIDERATIONS

6.9.1 MEASURING SUCCESS

As we navigate these changes to our organizational structure, it is imperative to evaluate our effectiveness and impact to the Agency. We have developed a strategic Organizational Redesign Measures Framework to assess how the recommended changes to the IRS organizational structure will improve our service to taxpayers, enhance the employee experience, and increase operational efficiencies within the Agency. Throughout the implementation of the Organizational Redesign Strategy, we will use this framework to develop additional, specific measures to track our progress in implementing our Taxpayer First Act priorities. Our future Organizational Blueprint Report will also feature an in-depth analysis on defined performance metrics to gauge implementation progress and complementary evaluation plan monitoring framework.

Organizational Redesign Framework The Organizational Redesign Measures Framework provides us with a guide for developing measures that consider both internal and external benefits that may result from our organizational design change. The framework applies the organizational redesign insights (identified challenges of the organization) and industry best practices as inputs to identify and define potential measures. Additionally, existing organizational measures can be utilized within the framework to measure redesign success.

From this framework we identified and developed three primary goals:

• Enhance the taxpayer experience

• Enhance the employee experience

• Improve operational efficiencies

Two of the three goals directly align with the Taxpayer Experience Strategy and Training Strategy. The alignment illustrates the strong connection between all three strategies and the need for a comprehensive suite of measures to assess progress in our implementation efforts.

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6.9.1 MEASURING SUCCESS

Figure 17: Graphic Depicting Org. Redesign Improvement Areas and alignment of notional measures

Enhancing Taxpayer Experience Our organizational structure is foundational to the execution of the Taxpayer Experience Strategy and enables a responsive approach to changes in future operations. The success of the initiatives within the Taxpayer Experience Strategy is dependent upon an organizational structure that enables us to best serve and interact with taxpayers. The Taxpayer Experience Strategic Goal of providing a seamless taxpayer experience can be enhanced by integrating program areas to create a holistic approach to service delivery. To best capture this alignment, the Organizational Redesign Strategy will use metrics from the Taxpayer Experience Strategy, Section 4.2.

Enhancing Employee Experience Our organizational structure must enable our workforce to provide optimal taxpayer service and efficient tax administration for compliance of the tax laws. To that end, we will improve our training, hiring and onboarding processes through our Training Strategy and Human Capital Office initiatives.

We will use our annual federal employee surveys to provide periodic long-term assessments of the employee experience and we also plan to use Climate Pulse Surveys to gain quick insight on the general health of our organization as we implement organizational structure changes. We will use this information to assess our improvements on an ongoing basis, quantify the impact of our change management efforts, and identify if we need to revise our initial strategy or refocus our efforts.

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6.9.1 MEASURING SUCCESS

The Office of Personnel Management Federal Employee Viewpoint Survey measures employees’ perceptions of whether, and to what extent, conditions characteristic of successful organizations is present in their agencies. The Federal Employee Viewpoint Survey serves as a tool for employees to share their perceptions in many critical areas including their work experiences and Agency leadership. ⁴⁴

Improving Operational Efficiencies We will also focus on capturing operational efficiencies realized as a result of the organizational redesign. Notional measures for streamlining operations within the agency and optimizing resources are provided in Organizational Redesign Splash page below, but the specific measures will be identified in coordination with development of the detailed Organizational Blueprint Report. We will assess opportunities for streamlining functions in both service and compliance operations and operations support functions to remove redundant processes, streamlining decisionmaking processes through more efficient governance options, and improving communication and collaboration across IRS organizations.

The Taxpayer First Act gives us a chance to look at our structure. It gives us a chance to look at where we’re effective, efficient,

and where we can

streamline.

— Lisa Beard, TFAO Executive

In conjunction with the analysis described to improve the taxpayer experience, we will also conduct a comparative analysis of processes, technology use and workforce needs. Utilizing cost centers to identify the resource expenditure in our current state and comparing to our future implemented organizational structure resource needs, we can identify where we have made progress in operational efficiencies.

When assessed together, the measures across taxpayer experience, employee experience and efficiency gains will provide insight into the progress and success of the organizational redesign implementation. Our improvements to the taxpayer experience, employee experience and operational efficiencies, will be gradual. Furthermore, the improvements across each of these three areas may vary due to the impact of rapidly implementable short-term initiatives in comparison to large scale enterprise initiatives that may require additional resources up-front before realizing long-term gains.

44 Source: Office of Personnel Management Federal Employee Viewpoint Survey.

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6.9.1 MEASURING SUCCESS

The IRS is a complex and diverse Agency responsible for administering federal tax laws that frequently change. The IRS has also taken on expanded roles in administering social programs that benefit taxpayers, such as a variety of tax credits, Affordable Care Act subsidies and Economic Impact Payments. When the Congress creates new laws and programs for the IRS to administer, it often does not include additional funding. Our proposed organizational structure is designed to support and enhance the Taxpayer Experience and Training Strategies, and we expect improved services and quality of work due to the realignment of the workforce. Reapplying resources for strategy and innovation and realigning service and enforcement functions will provide better revenue protection and allows us to be more agile in the approach we use to administer our very diverse programs and responsibilities. Cost saving opportunities from removing duplicative processes will be identified with development of the Organizational Blueprint Report, but the major benefit of the reorganization is optimizing the effects of the Taxpayer Experience Strategy and empowering our employees to do their job in the most effective manner.

It takes a suite of measures across multiple impact categories to assess progress of our Taxpayer First Act strategies and organizational change. We will monitor the measures throughout implementation and modify, as necessary.

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6.9.2 NON-STRUCTURAL COMPONENTS CRITICAL TO SUCCESS

Appropriations Successful implementation of the strategies called for by the TFA require changes to the IRS financial structure to ensure IRS appropriations reflect the new organizational structure. The IRS proposes to revise its financial structure to follow private sector business principles and align support costs to the programs they support.

The proposed IRS Centralized Services Fund would link support costs directly to mission activities. The Congress would appropriate funding for all activities within the same appropriation as the program they support. Thus the “consumer” of those resources would have a financial incentive to use these support services more strategically and efficiently.

Additional information on Appropriations recommendations are described in Section 9.8.

In addition to the organizational structural changes and proposed adjustments to appropriations, the Agency will also need to make changes in the following areas:

Policy and Legislation: Policy and legislative changes are needed to improve IRS efficiency, enhance taxpayer rights, and improve the taxpayer experience. See Section 9.7.9 for additional details.

Working Relationships with our Oversight and Advisory Partners: More proactive engagement with oversight partners and greater coordination managing engagement with oversight and advisory entities is needed to streamline our processes.

Governance Structure and Processes Streamlining governance structures and processes will provide more efficient decisionmaking, greater accountability for actions, and reduction in duplicative efforts.

These areas are critical to establishing a successful environment for the agency to maximize the effectiveness of our organizational changes and implement on our taxpayer experience goals. Details on these recommended changes are outlined in Section 9.7.11.

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ORGANIZATIONAL REDESIGN STRATEGY

GOALS TIMELINE

Enhance the taxpayer experience

Enhance the employee experience

Improve operational efficiencies

The Organizational Redesign Strategy will be implemented in phases that are closely aligned with the implementation of the Taxpayer Experience Strategy and Training Strategy.

Complete realignment of organizational design is highly dependent upon annual budget commitments. Continued ongoing investments will be needed to successfully reorganize at all levels across the organization.

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Organizational Redesign Timeline and Measures

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Organizational Redesign Timeline and Measures

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S E C T I O N